The proposed project is a USD 130 million senior secured loan to OOO News Outdoor Rus (the company), the largest “out-of-home” advertising media operator in the Commonwealth of Independent States. The loan will be used to facilitate creation of a pan-regional outdoor advertising network spanning several former Soviet republics by the company through acquisition of several local outdoor operators, integrating them into one unified pan-regional outdoor advertising network and making follow-on investments to fund capital expenditure across the region.
The proposed project will build on the original Bank financings of the company and will facilitate the restructuring of the nascent CIS outdoor advertising industry, which is excessively fragmented and dominated by inefficient small stand-alone local companies. As advertising promotes competition, access to information, and is a key element of any modern market economy, the project will support further development of an essential and efficient outdoor advertising infrastructure across the CIS necessary for development of a wide range of industries in each country and inter- and intra-country commerce. This financing will also strengthen the position of outdoor in the region as a viable and cost-effective advertising media.
The project will have a high demonstration effect. As the EBRD provides debt financing to facilitate the entry of the region’s leading outdoor operator into smaller CIS markets, it will send a signal of the Bank’s confidence in the viability of these advertising markets and help open the whole CIS outdoor advertising industry to external financing. The proposed financing will reinforce the connection between good practices of the company and access to external financing. The company’s expansion is spearheading high standards of transparency in the sector across the whole region and, as such it will have an overall positive impact on the whole CIS outdoor advertising industry.
OOO News Outdoor Rus, a limited liability company organised in the Russian Federation, is the largest “out-of-home” advertising media operator in Russia offering billboards, street furniture, transit and point-of-sale advertising. The company is majority-owned by a joint venture company created by tThe News Corporation Limited and a private equity fund managed by Capital International Inc.
The proposed financing consists of an A Loan for the Bank’s own account in the amount of up to USD 40 million with the participating banks providing the balance.
Total project costs are estimated as USD 173 million. The balance will be financed by the internally generated cash and existing cash balances of the Company.
This Project was screened C/1.
There are unlikely to be any significant environmental issues associated with this project. Main issues associated with outdoor advertisement business are visual effects and compliance with statutory and other outdoor advertising requirements. Environmental due diligence conducted for the previous News Outdoor projects in 2003 and 2004 confirmed that, apart from standard land use planning requirements, permits and the planning and installation of advertising units, there are no environmental issues associated with this business.
The company also confirmed that News Outdoors’ operations are in full compliance with the Advertising Committee and relevant municipal bodies' specifications and standards associated with the Russian outdoor advertising industry. The company is required to continue to comply with Russian and EU environmental, health and safety standards and requirements and local and national public consultation requirements as well as to submit the Bank an annual environmental report.
Mr. Russell Hoare, Chief Financial Officer
News Outdoor Rus
PO Box 86, 80 Leningradsky prospect
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